The seller take back
mortgage is a popular negotiating tool,
particularly when financing proves difficult
through conventional lenders and/or seller
participation provides better overall
package in negotiations.
The buyer maybe
attracted to this type of financing as it
may avoid certain costs or the buyer is not
able to obtain conventional financing
through a local bank and may require a STB
for the down payment.
STBs may be
seriously considered in the following
situations;
The seller is
anxious to sell and has no real concern
about taking back a mortgage to hasten
the sale of the property
The market is
strong, the buyer has a sufficient down
payment, the buyer qualifies for a
conventional mortgage, and the seller
can make more return from the mortgage
then from a savings account
The property has
a limited buyer appeal, due to age,
condition, location and seller financing
would improve overall marketing impact
The completion is
increasing and the seller to improve its
property marketability includes a
financing option with it
The seller is not
scared with being stuck with the STB and
can easily sell it on the open market
Buyers should take
into account that the seller in effect
becomes a lender when providing a seller
take back mortgage, therefore will require
credit check, sufficient down payment, and
reference letters.
The STB establishes
same relationship between the buyer and the
seller as that of the mortgagor and the
mortgagee.
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